Recession and Recruitment Top Advisor Concerns for 2020

WAYNE, Penn.–(BUSINESS WIRE)–Jan 28, 2020–

Hartford Funds today released new data revealing that financial advisors’ top concerns for 2020 include threats of an economic slowdown and difficulty recruiting and retaining talent. Hartford Funds surveyed advisors on the biggest challenges they anticipate in the year ahead for both their practice and their clients’ portfolios. The findings suggest that advisors may also be struggling to build the teams necessary to navigate industry disruptions and explore new areas of opportunity for clients, such as environmental, social and governance (ESG).

Talent sourcing challenges could exacerbate market concerns

Regarding their practices, advisors’ primary concerns for 2020 are the impact of an economic slowdown and sourcing new talent (31% each). Increasing industry competition from both robo-advisors and traditional wealth managers is the second most-cited challenge for their business (22%) this year. This sentiment among advisors underscores the importance of finding and retaining the right talent to maintain an advantage as competition increases and more advisors are leaving the industry.

“With the potential for a correction ahead and a wave of advisors on the cusp of retirement, it’s critical for advisors to identify and nurture talent to help weather potential volatility,” says Julie Genjac, Managing Director, Applied Insights at Hartford Funds. “Both specialized and intrapersonal skills will be at a premium as firms must find new ways to provide value to clients.”

Developing expertise in emerging investment trends is one area advisors may want to double down on. For example, despite sustainable investing being a point of focus for the industry, more than half of advisors (54%) do not implement ESG products or investing strategies in their clients’ portfolios. What’s more, 26% of advisors have little to no confidence that ESG investments can produce strong returns, and 19% are unsure, signifying the opportunity for advisors to learn more about these strategies and the available options for clients.

The impact of geopolitics on client portfolios

When considering their client portfolios, advisors are primarily concerned about the impact of geopolitics on the market going into 2020. More than a third (34%) believe geopolitical tensions, such as the ongoing foreign trade discussions, will create the biggest investing challenges. This concern is followed by a potential bear market (23%) and the 2020 Presidential election cycle (20%). Despite their fears of a softening market, less than 10% of advisors are concerned about a slowing pipeline of clients in the year ahead.

“Advisors are actively anticipating – and assumedly planning for – the geopolitical events and risks that will impact their clients’ returns in 2020,” says Genjac. “Often more challenging than safeguarding a portfolio is managing the emotional impulses of investors when volatility strikes. Now is the time for advisors to be proactive in connecting with their clients on the price of panic and building a plan to achieve their long-term financial goals.”

Methodology

The survey of 109 financial advisors was executed in-person at the Schwab IMPACT conference in November 2019.

About Hartford Funds

Founded in 1996, Hartford Funds is a leading asset manager, which provides mutual funds, ETFs, and 529 college savings plans. Using its human-centric investing approach, Hartford Funds creates strategies and tools designed to address the needs and wants of investors. Leveraging partnerships with leading experts, Hartford Funds delivers insight into the latest demographic trends and investor behavior.

The firm’s line-up includes more than 50 mutual funds in a variety of styles and asset classes, as well as a variety of multifactor and active ETFs. Its mutual funds (with the exception of certain fund of funds) are sub-advised by Wellington Management or Schroder Investment Management North America Inc. The strategic beta ETFs offered by Hartford Funds are designed to help address investors’ evolving needs by leveraging a unique risk-optimized approach, which identifies risks within each asset class and then deliberately and systematically re-allocates capital toward risks more likely to enhance return potential. Excluding affiliated funds of funds, as of September 30, 2019, Hartford Funds Management Company, LLC and its wholly owned subsidiary, Lattice Strategies LLC, had approximately $120.0 billion in discretionary and non-discretionary assets under management. For more information about our investment family, visit http://www.hartfordfunds.com.